Monday, November 30, 2015

How to Protect Your Budget and Skip the Financial Headaches this Holiday Season

Protect your budget and skip the financial headaches this holiday season

Well, it’s official. The holiday season is once again upon us. Among other things, it’s shopping season, as we prepare to give gifts to our loved ones. As tradition goes, this is supposed to be the most wonderful time of the year. However, according to the evidence on the ground, the vast majority of us find ourselves at the end of the most wonderful time of the year up to our eyeballs in financial regret of one form or another. This is typically the result of spending more money on gifts than we expected.

If you are among the millions of folks who keep exceeding your spending targets, year after year, and are looking for a fix, you might want to consider implementing these two suggestions.

First, understand that a gift is supposed to be a token and not the recipient's literal dollar value.

Obviously, this is something you already know. However, I think we need to remind ourselves of this fundamental truth from time to time, especially during the holiday season. It seems that, as a society, we are gradually moving away from this basic gifting tenet toward a view, however subtle, that the more expensive the gift, the more “acceptable” – and, quite frankly, they better you are, as the giver. That belief couldn’t be further from the truth.

Of course, I’m not implying here to avoid giving gifts you consider to be expensive. If you can afford to pay for them without creating an unnecessary burden on yourself after the fact, go ahead and knock yourself out. But that doesn’t change the fact that giving a gift should not place any unwelcome financial burden on you. Based on my experience in counseling folks over the years, I can tell you that this notion is at the very root of many of the financial nightmares that surround the holiday season.

Second, make a “cash list” instead of an “item list.”

More likely than not, you’re like most folks and have some form of shopping list. But it doesn’t seem to help much, in terms of keeping your overall expenditures within your expectations. You are probably going about it this way: you make a list of those to whom you intend to give gifts. You may or may not already have specific items in mind for certain people on your list. Then, of course, you do your absolute best to shop for the lowest possible prices for those gifts.

That is the wrong approach, because although you may be hoping to spend a certain amount, somehow you’ll end up way beyond that. To guarantee you’ll spend what you intend to spend – avoiding the risk of overspending and all the excess baggage it brings – include a “cash column” on your list, where you specifically indicate how much money you intend to spend on each individual. This way, you will select gifts that meet your cash targets, instead of the other way around, choosing gifts first and trying to juggle your budget to match them.

Happy shopping. And all the best this holiday season!
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